Gold Diversification: Why and how much?

Gold is the historic refuge when the currency falls in value and the economy lies in ruins. Having physical gold is commonly seen as protection and safety during hard economic times. Physical gold is often used to diversify a broad investment portfolio to balance economic risk.

Gold diversification goes two ways. There is the use of gold to diversify an investment portfolio and there is diversification with a gold investment portfolio. But, why diversify?

Investors in traditional vehicles such as stocks and bonds often add physical gold to their portfolio to offset the risks of inflation, a stock market collapse, the burst of a real estate bubble, and economic chaos in general. During economic hard times tradition “paper” investments may suffer greatly. During the same time physical gold tends to rise. Experts recommend between twenty and thirty percent physical gold in an investment portfolio to provide sufficient diversification between hard assets and paper.

Within physical gold investments there are two avenues, gold bullion and certified gold coins. Gold bullion tends to move contrary to the value of the US dollar so it will help support an investment portfolio in the near term as dollar backed investments suffer.

Certified gold coins can do substantially better over the years than gold bullion. These investments can act as a long term asset to diversify a portfolio of dollar backed investments and to provide the possibility of substantial long term appreciation. A $1,000 investment in a mix of mint state gold coins in 1970 would be worth over $100,000 according to the PCGS Mint State Gold Coin Index. This is a measure of what physical gold rare coins can do long term for an investment portfolio.

For more information on smart gold investing read the information listed below. To talk to a gold expert about gold diversification with physical gold products call 1-800-300-0715. We will be pleased to speak with you.